UP TO OUR EARS IN DEBT

RMTnews :: august/september 2007 :: www.rmt.org.uk 30 If you’re stressed over the credit card bill, you’re in good company, because in Britain there are now more credit cards than people. Our economy has become based on consumer credit – a massive debt mountain. Nobody likes to talk about being in debt, but it has become a nightmare for millions of people and big business for banks, moneylenders and the retail industry. Personal debt is now well over a trillion pounds (a million-million). The Government quite like us being it debt – they call it the ‘consumer boom’. Many students are forced to take out student loans so they start their working lives owing tens of thousands of pounds. Likewise working people needing a roof over their head are forced to take out massive mortgages since council houses are only available in tiny numbers. Rent controls were abolished years ago - contributing to soaring house prices and speculation in the housing market. Meanwhile we all know privatisation pushed up prices big time, especially for fuel bills. Governments of both parties have a lot to answer for. The human cost is getting continually worse. Every month ten thousand people go bankrupt or become insolvent. Another eighty thousand have County Court Judgments made against them. And as the debts get bigger, the lenders get worse. They are increasingly willing to apply for charging orders so that loans are secured against properties. If that doesn’t work they sell their debts to collection agencies, who often try to intimidate. This is all pretty nasty stuff, especially since many people in debt have other problems like illness, unemployment or mental health issues. Collection agencies usually bully vulnerable people more than others, seeing them as weak. If you resort to money lenders, it gets worse, with huge rates of interest. What’s the answer? We need laws to stop some making obscene profits, while others struggle to live. There should be controls on rent and regulation of the banks and finance institutions. Even better they should be nationalised. All older people should receive a living pension. Let’s face it - we urgently need a political party that will fight for working people. Unless something is done, there could be a crash when the bubble bursts. CREDIT UNION Meanwhile, there are ways you can stand up to the moneylenders. Join the RMT Credit Union for one (see page 38). If you are in debt, avoid taking out more high interest loans. You can get free advice from the Citizen’s Advice Bureau, the National Debtline or the Consumer Credit Counselling Service. Or you can sit down, work out a budget and approach your creditors to try and agree repayments you can manage. You are certainly not alone. There are stacks of people out there in the same boat, many of them sharing advice on internet websites such as moneysavingexpert.com or fool.com. Even the Financial Times commented recently: “The bogeyman that is the Ugly Capitalist, with his cigar, top hat and astrakhan collar, is reviving in popular perceptions”. TOTAL UK PERSONAL DEBT • Total UK personal debt at the end of April 2007 stood at £1,325bn. The growth rate increased to 10.4 per cent for the previous 12 months which equates to an increase of £114bn. • Total secured lending on homes at the end of April 2007 stood at £1,112bn. This has increased 11.4 per cent in the last 12 months. • Total consumer credit lending to individuals in April 2007 was £213bn. This has increased 5.4 per cent in the last 12 months. • Total lending in April 2007 grew by £9.4bn. Secured lending grew by £8.9bn in the month. Consumer credit lending grew by £0.5bn. • Average household debt in the UK is £8,816 (excluding mortgages) and £54,771 including mortgages. • Average owed by every UK adult is £28,189 (including mortgages). This grew by £165 last month. • Average outstanding mortgage for the 11.6m households who currently have mortgages is £95,871 • Average interest paid by each household on their total debt is approximately £3,542 each year (this equates to nine per cent of take home pay). • Average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and unsecured personal loans has risen to £4,537 per average UK adult at the end of April 2007. • Britain's personal debt is increasing by £1 million every 4 minutes. UP TO OUR EARS IN DEBT EC member Olly New looks at the growing problem of debt